United States of America v. Linda J. Hampton

The opinion of the court was delivered by: Barbara A. McAuliffe United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS RE: PETITION FOR JUDICIAL APPROVAL OF LEVY ON PRINCIPAL RESIDENCE

I. INTRODUCTION

Pending before the Court is the United States' ("Petitioner") Petition for Judicial Approval of Internal Revenue Service Levy On a Principal Residence. (Doc. 2.) Petitioner seeks to levy upon Linda J. Hampton's ("Respondent") principal residence to satisfy Respondent's unpaid federal income tax liabilities, interest, and penalties for the 1991, 1992, 1997, 1998, 1999, 2001, 2002, 2003, 2006 and 2009 tax years. For the following reasons, the Court recommends that the petition be GRANTED.

II. DISCUSSION

This proceeding is brought, and the Court's jurisdiction arises, pursuant to section, 28 U.S.C. § 1340 and sections 6334(e)(1) and 7402(a) of the Internal Revenue Code (26 U.S.C.) ("Code").

By statute, "[i]f any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand," the government may collect the unpaid tax "by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax." 26 U.S .C. § 6331(a). Section 6334 provides in relevant part that, "[a] principal residence shall not be exempt from levy if a judge or magistrate of a district court of the United States approves (in writing) the levy of such residence." 26 U.S.C. § 6334(e)(1).

The United States may seek judicial approval of a levy on a taxpayer's principal residence pursuant to 26 U.S.C. § 6334(e). In order to obtain such approval, the United States must file a petition demonstrating that: (1) the underlying tax liability has not been satisfied, (2) the requirements of any applicable law or administrative procedure relevant to the levy have been met, and (3) there is no reasonable alternative for collection of the taxpayer's debt. 26 C.F.R § 301.6334--1(d)(1). "The taxpayer will be granted a hearing to rebut the Government's prima facie case if the taxpayer files an objection within the time period required by the court raising a genuine issue of material fact demonstrating that the underlying tax liability has been satisfied, that the taxpayer has other assets from which the liability can be satisfied, or that the Service did not follow the applicable laws or procedures pertaining to the levy." 26 C.F.R § 301.6334--1(d)(2). "The taxpayer is not permitted to challenge the merits underlying the tax liability in the proceeding." Id. "Unless the taxpayer files a timely and appropriate objection, the court would be expected to enter an order approving the levy of the principal residence property." Id.

In support of its application, Petitioner submitted the sworn declaration of Revenue Officer Josephine Ramos, dated November 27, 2012, and Certified IRS Form 4340 transcripts, showing that the Internal Revenue Service ("IRS") assessed federal income tax, interest, and penalties against Respondent. (Doc. 2, Attach. 2, 3.) Moreover, Petitioner submitted proof that the IRS properly notified Respondent of her liabilities and made a demand for payment from Respondent. Id.

After the filing of the Petition, the Court issued notice of the petition and an order to show case for why the levy should not issue on January 16, 2013. (Doc. 3.) The Order to Show Cause was personally served on Respondent. (Doc. 4.) The Order to Show Cause notified Respondent of the Petition and informed her that Petitioner sought an order allowing the IRS to levy upon real property located at 107 Elmwood Ave., Modesto, CA 95354 (the "Subject Property") to satisfy Respondent's income tax liabilities. The Court further advised Respondent of her right to object to Plaintiff's Petition and ordered her to file any objections in writing with the Clerk of Court within twenty-five days of the service of the order. (Doc. 3.) The Order advised Respondent that if no timely written objections were filed, the Court would enter an order approving an IRS levy on the subject property. Id.

To date, Respondent has not filed any written objections with the Clerk of Court to the Petition, and more than twenty-five days have elapsed since the Petition and the Court's Order to Show Cause were personally served upon Respondent. Additionally, Respondent did not appear at the Order to Show Cause hearing on March 1, 2013. Accordingly, the Court finds that the Petition for Judicial Approval of Levy Upon Principal Residence should be granted. See, 26 C.F.R. § 301.6334--1(d).

III. RECOMMENDATION

IT IS HEREBY RECOMMENDED THAT the United States' Petition for Judicial Approval of Internal Revenue Service Levy upon the Principal Residence of Respondent, Linda J. Hampton, located at 107 Elmwood Ave., Modesto, CA 95354 be APPROVED.

IT IS FURTHER RECOMMENDED THAT a levy upon Linda J. Hampton's interests in the real property located at 107 Elmwood Ave., Modesto, CA 95354 to satisfy all or part of the unpaid federal income taxes, penalties, interest, and other statutory additions for the income tax years 1991, 1992, 1997, 1998, 1999, 2001, 2002, 2003, 2006 and 2009, as set forth in paragraph five (5) and six (6) of the Government's Petition, which may be executed by any authorized officer of the Internal Revenue Service, be APPROVED.

These findings and recommendations are submitted to the assigned United States District Judge pursuant to 28 U.S.C. § 636(b)(1) (B). Within fourteen (14) days after the date of these Findings and Recommendations, the parties may file written objections with the Court. The document should be captioned "Objections to Magistrate Judge's Finding and Recommendation." The parties are advised that failure to file objections within the ...

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